Regulation: Why are so many firms failing on suitability?

A recent ‘Dear CEO’ letter from the FSA to the heads of wealth management firms followed a review where 14 out of 16 firms contacted were judged by the FSA to pose a high or medium-high risk of client detriment on suitability concerns. Overall, 79% of files examined fell short. It’s important to recognise that in many cases the problems have been caused by shortfalls in the advice process resulting in a lack of, or out of date, Know Your Customer information. Advisers should be aware that the FSA “considers suitability – and the ability to demonstrate it – a key area of risk” and advi...